Blues skipper Terry, 25, said: "It is the ultimate honour to be the captain of your country and I am very proud to be given this great opportunity. It is an incredible challenge and one I am looking forward to very much."
England manager Steve McClaren said:"Choosing a captain is one of the most important decisions a coach has to make. I'm certain I've got the right man in John Terry. I'm convinced he will prove to be one of the best captains England has ever had.
"John has all the attributes an international captain needs: leadership, authority, courage, ability, tactical awareness and a total refusal to accept second-best. He has been an inspiration for Chelsea and is at his best in adversity.
"Over the five years I've been involved with the England coaching set-up I've seen first hand the respect that John has among his fellow players. There are a number of strong leaders in the squad and he will not lack support on and off the pitch.
"Steven Gerrard was a strong candidate for the captaincy and he will be my vice-captain. He is an outstanding player and another superb club skipper who also leads by example.
"I told Steven when I spoke to him today that I'm sure he will also get the chance to lead his country while I'm Head Coach.”